Market demand is given as Q_D= 300 - 3P.Market supply is given as Q_S= 2P + 100.If price increases from $40 to $45,what is the price elasticity of demand

Question

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The price elasticity of demand is calculated using the formula: (percentage change in quantity demanded) / (percentage change in price). At P = $40, QD = 300 - 3(40) = 180. At P = $45, QD = 300 - 3(45) = 165. The percentage change in quantity demanded is (165 - 180) / 180 = -0.0833, and the percentage change in price is (45 - 40) / 40 = 0.125. Therefore, the elasticity is |-0.0833 / 0.125| = 0.6664, which is closest to 0.8.

Market Demand Is Given as QD = 300 - 3P

Market Demand Is Given as Q_D= 300 - 3P